Expectations of a decline in oil prices are rising

Osama Rizvi, Energy and Economic Analyst at the international data firm Primary Vision Network, stated that the production increase by OPEC+ members is a move that is difficult to understand from a market perspective. Rizvi noted that the recovery in the global economy is proceeding moderately, but risks remain on the downside. "Oil prices could soon fall below 50 dollars again. If a consensus is reached between Russia and Ukraine, the OPEC+ group's increase in production in a low-demand environment could pull prices down to the 40-dollar band," he said.

OPEC+ DECISION AND MARKET EFFECTS

Saudi Arabia, Russia, and other OPEC+ members decided in July to increase oil production by 411 thousand barrels per day. This decision was made due to the stable outlook of the global economy and the fact that low oil stocks point to healthy market fundamentals. However, the combination of this increase with existing demand concerns has strengthened expectations that an oversupply could emerge in the markets.

In OPEC's April report, the global oil demand growth forecast for 2025 was revised downward. Demand is expected to reach 105 million barrels per day, an increase of approximately 1.3 million barrels per day compared to last year.

US SHALE OIL AND TRUMP'S POLICIES

Fereydoun Barkeshli, President of the Vienna Energy Research Institute, stated that low oil prices pose a risk for shale oil producers in the US. "Even large companies cannot sustain their operations for a long time at prices around 50-60 dollars per barrel," he said. Barkeshli emphasized that there has been a decline in the number of drilling rigs in the US and that this situation shows that market participants need to focus on the big picture.

US President Donald Trump's tariff policy is also creating uncertainty in international oil markets. Barkeshli stated that oil demand is directly linked to global economic performance, noting that the policies of the Eurozone, as well as the growth outlook and oil consumption of China and India, must be closely monitored by the market.

News Source: 12punto